Saving for a plot of land

elliewild

Hello all. I need a bit of advice - i'm 7 years into my business (its going well) and would like to buy a plot of land to further my business and eventually live on. My question is i have around £10,000 of savings which i hope to be adding to over this year. Land doesnt come up often in my area. Am I better served by using my savings to pay off some of my business vehicle (currently 8.9% over 60months) or having savings in the bank if land does pop up. Land has come up in the past and i've been unable to put in any interest as i have no deposit (if i was to finance the land) or buy as ive had no money. not sure what im best doing. I do have a mortgage of around £85000 (my house is worth around £200,000 but id rather not sell up to access equity until i have land) any suggestions? 

grumbler

elliewild said:

Am I better served by using my savings to pay off some of my business vehicle (currently 8.9% over 60months) or having savings in the bank if land does pop up. Land has come up in the past and i've been unable to put in any interest as i have no deposit...

Only you can decide what is better. What's clear is that no easy access savings account can offer anything even close to 8.9%.
Neither can even fixed-rate savings accounts with restricted access.

sevenhills

elliewild said:

 My question is i have around £10,000 of savings which i hope to be adding to over this year.

It doesn't sound like you are ready to make a decision yet. Buy premium bonds and invest in the stock market if we have a crash.
How is your money invested now?

grumbler

sevenhills said:

elliewild said:

 My question is i have around £10,000 of savings which i hope to be adding to over this year.

Buy premium bonds and invest in the stock market if we have a crash.
How is your money invested now?

Not sure about premium bonds, but IMO investing is certainly not  good option when the OP can need the money on a very short notice and pretty soon, even in a year or so.

sevenhills

grumbler said:

Not sure about premium bonds, but IMO investing is certainly not  good option when the OP can need the money on a very short notice and pretty soon, even in a year or so.

That would depend on how fast he is saving and when a plot of land becomes available.
He has business debt and he is paying a mortgage.
Minimum price for a piece of land, £20k?

grumbler

My understanding was that this can be just one year, and it's for a deposit, not to buy outright -

elliewild said:

... i have around £10,000 of savings which i hope to be adding to over this year. ...in the past ... i've been unable to put in any interest as i have no deposit (if i was to finance the land)

steampowered

elliewild said:

Am I better served by using my savings to pay off some of my business vehicle (currently 8.9% over 60months) 
...
id rather not sell up to access equity until i have land 

I would be interested to know how you are receiving an 8.9% return? Is this interest on a business loan? That is a really high rate and exceeds the typical equity return you would get from the stock markets.

My gut reaction is to think that it is mad to be paying 8.9% on a business loan in order to save interest on a mortgage - given that most mortgages are currently around 2%. Unless there is a very convincing tax benefit to doing it this way?

steampowered

grumbler said:

Only you can decide what is better. What's clear is that no easy access savings account can offer anything even close to 8.9%.
Neither can even fixed-rate savings accounts with restricted access.

Indeed, neither can the stock markets. The average rate of return on the stock markets is about 7.5% per year. And that's compensation for taking the risk of equity investments.

A risk-free return of 8.9% with investments is pretty much unachievable.

Grenage

He's paying 8.9% on a vehicle loan.